“The pace and magnitude of global change have escalated and the UK has been short of the dynamism it takes to stay ahead,” the document says. “Our modern Industrial Strategy will help us seize the most significant opportunities and create the most favourable conditions in key UK sectors for the companies of the future to emerge here – the ones that have a transformative role to play in the clean energy transition, the tech revolution, the fundamental impact of AI on every sector.”
Published today (23 June), the plan focuses on eight sectors (known as the IS-8) with high potential for growth, almost all of which are underpinned by engineering: advanced manufacturing, clean energy, creative industries, defence, digital and technologies, financial services, life sciences, and professional and business services.
Here are five of the most significant ways that the 10-year strategy will shape engineering and manufacturing.
AI deployment will accelerate
The single biggest technological development since the previous Industrial Strategy is the rapid creation and largely unregulated deployment of advanced new artificial intelligence (AI) tools, spearheaded by the US and China. But AI uptake has been too slow in the UK, according to the government, which set out multiple plans to accelerate deployment.
“The superstar firms of 2035 will leverage AI,” says the document, with plans including making the UK “an AI maker rather than an AI taker”. “It also sends a message to our eight sectors. The government is preparing for the prospect of transformative AI: business must do too.”
Measures include a new partnership with tech giants Nvidia, Google and Microsoft to train more than seven million UK workers in “essential AI skills” by 2030. More than £2bn funding will drive a new AI Action Plan, including up to £500m for a ‘sovereign AI unit’ within government, aimed at securing the UK’s foothold in “frontier AI” by investing and working with the private sector on data, computing and talent.
A further £187m will be used to train one million young people in relevant skills, and to direct research and development (R&D) investment in frontier technologies such as semiconductors and quantum technologies. Much of the investment will be provided through new ‘AI Growth Zones’ including Culham in Oxfordshire, with support for planning approvals and access to energy, while expansion of the government’s AI Research Resource will increase compute capacity and support for start-ups.
The government hopes its announcements will lead to wider use of AI, which has major engineering applications such as generative design and simulation, predictive maintenance, process automation and data analysis. The training roll-out will need to succeed quickly to make the most of the available opportunity – and concerns around high energy use will likely increase scrutiny on companies’ environmental credentials.
Energy-intensive companies will get a helping hand
The Covid-19 pandemic and wars around the world have shaken the UK energy market in recent years, with energy prices still closely tied to international gas prices despite significant investments in renewable energy.
High electricity bills and long waits for grid connections are “two of the biggest barriers facing UK industry”, a government announcement said today, with manufacturers paying some of the highest prices in the developed world. “For too long these challenges have held back growth and made it harder for British firms to compete.”
The Industrial Strategy aims to change that with measures including a new competitiveness scheme from 2027, which will reduce electricity costs by up to £40 per megawatt-hour for over 7,000 electricity-intensive businesses in manufacturing sectors such as automotive, aerospace and chemicals. The companies, which could see their electricity bills cut by up to a quarter, will be exempt from paying levies such as the renewables obligation, feed-in tariffs and the capacity market.
While companies will welcome a reduction in their bills, widespread exemptions from green levies could raise fears of delays to deployment of renewables, or higher costs for taxpayers.
The government will also increase support for the most energy-intensive firms – in industries including steel, chemicals and glass – by covering more of the electricity network charges they pay through the British Industry Supercharger. A 60% discount on those charges will increase to 90% next year. A new connections accelerator service is also aimed at streamlining grid access for major investment projects.
‘Burdensome’ regulations will be cut
One of the government’s main aims for the plan is to make it “easier and simpler for companies to do business, giving them the stability to make long-term investments”. Cutting “regulatory burdens” is a key part of that goal, aiming to streamline a framework it says has become “too complex, uncertain and risk averse”.
Specific plans include reducing the administrative costs of regulation by 25%, targeted reforms to streamline “burdensome” processes, and development of clear time targets for processing authorisations. A new Regulatory Innovation Office is also aimed at clearing the path to market for innovative products, accelerating adoption in key sectors.
Changes for specific engineering sectors include a refresh of the Zero Emissions Vehicle mandate and reduced ‘red tape’ for heat pump installation.
Businesses will doubtless welcome any changes that reduce costs and speed up operations – but, as ever, cutting regulations will raise wider concerns about potential damage to the environment, and the demands of corporations taking precedence over the public.
Advanced manufacturing will get major support
Advanced manufacturing – including aerospace, automotive, advanced materials, batteries and space – is a major focus in the new plan. The sector will receive up to £4.3bn in funding, including up to £2.8bn in R&D over the next five years. The funds are aimed at “anchoring” supply chains to the UK and boosting sectors such as automotive, with a new government target of increasing vehicle production to 1.35 million – up from 780,000 in 2024. Other targets include developing the next generation of technologies for zero-emission flight.
“By 2035, the UK will be the best place in the world to start, grow, and invest in advanced manufacturing. Our ambition by 2035 is to have nearly doubled annual business investment in the sector from £21bn to £39bn, driving growth across the economy,” the strategy says.
Reduced electricity bills and regulations will play a key role in these aims. Other measures include increased deployment of state-of-the-art technologies including industrial robotics and digital twins.
More new trainees will be available
The strategy includes an extra £1.2bn per year for skills by 2028-29, with new short courses in relevant skills for high-growth industries funded by the Growth and Skills Levy.
With engineering skills “at the heart” of several of the IS-8 sectors, according to the document, the government will provide £100m over three years to support engineering skills in England, working with Skills England to determine how it can increase the pipeline of talent. The body will aim to ensure training and qualifications “remain aligned with shifting workforce needs”, while new Technical Excellence Colleges will address shortages.
IMechE has previously called for a National Engineering and Technology Workforce Strategy to address the worker shortage and plan for future demand. While today’s strategy release does not commit to the plan, the government says it will work with industry to assess which sectors need such strategies.
“Putting skills at the heart of growth is the right call – and the government’s new commitments are a strong signal of intent. The additional £100m to support engineering skills, Global Talent Taskforce and investment in apprenticeships and Technical Excellence Colleges are steps in the right direction,” said David Grailey, managing director of training provider MTC Training.
“But ambition alone won’t deliver results. We need smart, targeted workforce planning to match talent with opportunity – region by region, sector by sector. The question is clear: do we have a skills base where the investment is landing?”
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Content published by Professional Engineering does not necessarily represent the views of the Institution of Mechanical Engineers.